Brazil denies Total a license to drill near Amazon mouth

iStock

Braslia - Brazil's environmental regulator on Friday denied French oil giant Total a license to drill for crude in five blocks near the mouth of the Amazon river.

Regulatory agency Ibama said the license was denied "due to a set of technical problems" identified during the application process.

It explained that the decision was based "on the deep uncertainties" detected in an emergency plan presented, "aggravated by the possibility of an oil spill that may affect the coral reef present in the region and by extension marine biodiversity."

A Brazilian prosecutor warned of "extreme environmental peril" in recommending against the granting of the drilling license earlier this year, saying that: "the only way to guarantee avoiding environmental damage to the area is to deny the license."

Environmental campaigners Greenpeace meanwhile warned that a previously discovered coral reef had been found to extend right into where Total plans to drill.

The finding, made during a research expedition, invalidated Total's environmental impact assessment, which was based on the reefs being located at least eight kilometers from drilling, Greenpeace said.

In 2013, Total joined BP and Brazil's Petrobras to buy the exploration blocks near the mouth of the Amazon. But they had yet to win permission to search.

Petrobras is the jewel in Brazil's crown: Latin America's most valuable enterprise, a $100bn oil and gas group whose crude output puts the country in the top 10 league globally, rivalling that of many OPEC members.

Yet it is also the most indebted oil company in the world. And it is at the heart of the biggest corruption scandal to rock Brazil: a graft probe that has claimed numerous political scalps, not least that of former leftist president Luiz Inacio Lula da Silva.

Today, Brazil has proven reserves of 13 billion barrels and produces 2.5 million barrels of oil a day, according to the US Energy Information Administration.

Petrobras has seen sharply higher profits this year: $2.7bn in the second quarter, stronger than expected.

Brazil, Latin America's most populous country with 208 million inhabitants, suffered its worst-ever recession between 2014 and 2016.

Last year it returned to growth, but only timidly.

The number of people living in poverty in Brazil grew by two million last year.

Unemployment rose from 6.9% to 12.5% between 2014 and 2016. The latest figures, dating from October this year, show it has declined to 11.7%, government data show.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.78
(-0.14)
ZAR/GBP
21.49
(+0.07)
ZAR/EUR
19.73
(+0.03)
ZAR/AUD
12.10
(+0.19)
ZAR/JPY
0.16
(-0.19)
Gold
1913.33
(-0.18)
Silver
24.62
(-1.54)
Platinum
885.00
(+0.23)
Brent Crude
42.14
(-3.94)
Palladium
2294.00
(+0.35)
All Share
53319.08
(-2.48)
Top 40
49153.11
(-2.47)
Financial 15
9519.48
(-3.27)
Industrial 25
71014.52
(-2.13)
Resource 10
53931.91
(-2.72)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1320 votes
It depends on how the funds are used.
73% - 8678 votes
No. We should have gotten the loan elsewhere.
16% - 1914 votes
Vote